UBS does not expect a seller’s market for property
The real estate experts at UBS expect that prices for condominiums and single-family homes will only rise slightly in 2024. A stronger price dynamic is forecasted from 2025 onwards. The prices for office spaces are expected to stabilize at a low level.
The proportion of the population that can afford a mid-range home has fallen from around 60 per cent to around 15 per cent over the past 20 years, explains UBS in a press release on its Real Estate Focus 2024. Price increases for condominiums and single-family homes are therefore currently being driven mainly by the influx of affluent people from abroad and strong growth in upper incomes. For the current year, the real estate experts at the big bank expect prices for condominiums to rise by 1.5 per cent and for single-family homes by 1.0 per cent. However, UBS estimates that prices should pick up again from 2025 due to lower financing costs, housing shortages and an improved economy.
Prices on the market for office space are expected to stabilise at a low level. According to the press release, prices in prime locations fell by 10 to 15 per cent last year. According to the property experts at UBS, the high interest rates are the reason why the price correction has already been completed.
In the market for multi-family homes, sharp increases in asking rents have so far been able to compensate for the equally increased borrowing costs and the reduced attractiveness of achievable yields. “Accordingly, the purchase prices of apartment buildings have stabilised,” write the UBS experts. They assume that purchase prices will rise again from next year at the latest.